Welcome to our 4-Part blog series on Drop Shipping. We want to show you how your business can start utilizing Drop Shipping as a Lean way to grow your product line and bring greater value to your customers
- How Drop Shipping Will Help Your Distribution Grow
- Triple Your Product Line the Lean Way
- Managing Drop Shipping and Your Own Warehouse
- Don’t Waste Warehouse Space on Slow-Moving Inventory
Triple Your Product Line the Lean Way
In business, growth is nearly always the major focal point for sustainability. If you want to be profitable in three, five, or ten years from now, your firm must be able to grow with the competition and meet the changing demands of consumers.
A common solution is to add more products. While this may seem an obvious choice, it’s worthwhile to understand how to add products the lean way.
Dual Benefits of Growing Your Product List
Growing your product list can be advantageous for any number of reasons. However, two stand out above the rest. If you’re thinking about adding new product lines to your brand, these are the dual benefits you can hope for:
- Wider Reach
First off, more products means wider reach. As you introduce more diversity into your brand, you’ll naturally discover that your target market widens and it’s possible to introduce new and different consumers into your customer base.
For example, let’s say you’re an outdoors store that specializes in selling camping supplies, fishing gear, and boating equipment. You’re probably only going to reach a small segment of the market; that is, people who enjoy hiking, camping, fishing, and being outdoors.
Is there anyone possible beyond that? By adding an entirely new product line that’s unique yet related, such as golf and tennis products, you may suddenly expand your reach.
You’re no longer just targeting people who love the wilderness, but are also going after people who enjoy playing outdoor sports. This is one of the primary benefits of growing your product list. You gain access to additional customers while keeping your current customer base loyal and engaged.
- Increased Profitability
As you sell more products and reach a wider demographic, you can likely expect to see increased profits. Do you really need an in-depth explanation of this benefit?
More sales mean more revenue, which ultimately leads to a stronger brand with a brighter future and further opportunities for growth and expansion. What business wouldn’t want that?
The Negatives of Adding More Products
The benefits to growing your product list are pretty obvious, but we would be remiss not to mention the constraints it can put on your business. In particular, make sure you understand the two biggest problems when businesses move too fast and try to expand their product list without developing a calculated strategy in advance that allows them to compensate for deficiencies.
- Demand for More Space
The first thing you have to realize is that more products mean more inventory, which creates demand for additional space. This is a very real issue that some businesses overlook until they’re caught in a bind.
If your warehouses are already filled to the brim with inventory, how can you expect to add new products? There are obviously several ways you can optimize warehouse space for more efficiency and space, but only so much can be done with whatever physical limitations you have.
Suddenly your decision to grow your product list means you have to build an additional warehouse or expand your existing footprint. That may mean you’ll be kissing your additional revenues goodbye for a few years.
- Drain on Time
The second thing to watch for is the potential loss of time. You can’t simply add a new product line and expect your current operations to stay the same. Additions will require time to manage — especially on the logistics front — which means you’ll be forced to take time away from other aspects of your business.
The Solution: Drop Shipping
So what can you do if you have the opportunity to double or even triple your product list? Is the only answer to expand your warehouses and hire more employees?
You don’t have to do that exactly. You can still enjoy the benefits of a wider reach and increased profitability if you focus on these two words: drop shipping.
As Armando Roggio of PracticalEcommerce says so well, “Drop shipping is an order fulfillment strategy where the retailer does not keep products in inventory, but relies on wholesalers or manufacturers to actually ship orders to customers.”
In other words, drop shipping is a supply-chain technique that allows you to sell products without having to keep them in stock. You simply align your business with a wholesaler or manufacturer who keeps the proper inventory on hand.
When one of your customers places an order through your website, you just forward the order to the drop shipper and that company picks, packs, and ships it. After the shipper takes its share of the sale, the remaining revenue is passed along to you.
The benefits of drop shipping are numerous, but consider the following and how they might enable you to enjoy lean scalability and growth:
- Minimal investment. With drop shipping, you only pay for the products when they’ve sold. This means you don’t have to worry about investing in large inventory orders that may or not move quickly.
- Hands-off. The hands-off nature of drop shipping means you don’t have to hire additional employees to handle new product lines. Though you’ll have to invest in new marketing and advertising efforts, operations on the warehouse side of the business stay the same.
- Freedom to experiment. When you leverage drop shipping, you have the freedom to experiment with different products. If something doesn’t work, you only lose the time and marketing dollars you spent on it. This advantage allows companies to try new things without damaging their existing model.
Contact QStock Inventory Today
At QStock Inventory, we take inventory management and supply-chain visibility very seriously. That’s why we’ve spent years developing some of the industry’s premier inventory management and inventory control software solutions.
From food distribution and e-commerce to consumer goods and electronic devices, our technology is currently being leveraged in numerous industries across various sectors. If you’d like a free demo of any of our solutions, please don’t hesitate to contact us today.
We’d be happy to tell you more about how these products work and how they’ve helped our clients improve their efficiencies. If drop shipping is something you’re interested in learning more about, check out our webinar, Drop Shipping for Ecommerce, and we’ll provide you with even more resources and knowledge to help you scale your business the lean way.